Credit card securitization is likely to surpass its $20 billion forecast this year, although the sector still faces competition from cheaper funding options, Standard & Poor's analysts said in an emailed report today.
The rating agency reported that year-to-date issuance for the sector is $15 billion, citing figures from Bloomberg. S&P analysts expect full-year volume to top its $20 billion forecast.
However, despite the issuance uptick, S&P said that the annual volume is well below the market's $100 billion peak in 2007.
Additionally. they predict net negative issuance as a result of outstanding credit card ABS declining to about $130 billion from $158 billion in 1Q12 due to maturities by the end of this year.
"Cheap deposit-funding alternatives from banks and ongoing regulatory issues continue to be a drag on the issuance activity," analysts said.
They added that several large credit card issuers such as Discover Financial Services, GE Capital, and JPMorgan Chase have been using securitization recently as a funding diversification tool.